Negotiating Across Cultures Understanding and Adjusting to Different Values Dr. Melanie Billings-Yun

Cultural Differences in Negotiation National/regional differences Collectivism/Individualism Power distance High- vs. low-context speech Ethical values Institutional values Business vs. government Copyright © 2012 by Melanie Billings-Yun.

Collectivism/Individualism Group Loyalty Self-Orientation Copyright © 2012 by Melanie Billings-Yun. Source: Geert Hofstede, Cultures and Organizations

Most non-Western cultures Effect on Negotiation Collectivistic Prefer harmony Compromising Face (external) Need to earn trust Pass information to group for decision Slow-paced, tentative Individualistic Aim to win Polarizing Pride (internal) Give trust easily Make decisions based on personal opinions Fast-paced, decisive Most non-Western cultures Most Western cultures Copyright © 2012 by Melanie Billings-Yun.

Power Distance Equal Rights Social Hierarchy Copyright © 2012 by Melanie Billings-Yun. Source: Geert Hofstede, Cultures and Organizations

Two-thirds of all countries Anglo-Saxon, Germanic and Nordic countries Effect on Negotiation High Power Distance Status/rank valued Power persuades Form is essential Resistance to change Agreement at the top is normally sufficient Low Power Distance Expertise/talent valued Reason persuades Substance over form Change accepted Agreements must be sold to all stakeholders Two-thirds of all countries Anglo-Saxon, Germanic and Nordic countries Copyright © 2012 by Melanie Billings-Yun.

High vs. Low Context Speech Copyright © 2012 by Melanie Billings-Yun.

Effect on Negotiation High Context Indirect/ non-verbal Circular Intuitive Past-oriented Avoid disagreement Low Context Direct / verbal Linear Rational Future-oriented Open disagreement Asia, South America, Africa and Middle East Europe, North America, Australia and NZ Copyright © 2012 by Melanie Billings-Yun.

Culture and Ethical Values Particularism Relationships paramount Emotional persuasion Goal is relationship A good partner honors changing circumstances Loyalty to in-group Universalism Rules paramount Logical persuasion Goal is contract A good partner honors his contract/word Equal treatment for all Asia, South America, Africa and Middle East Western countries and Singapore Copyright © 2012 by Melanie Billings-Yun.

Which Are You? Question one: You are riding in a car driven by a close friend. He hits a pedestrian. You know he was going at least 75 km/hr in an area of the city where the maximum is 50 km/hr. There are no other witnesses. His lawyer says that if you testify under oath that his speed was only 50 km, it may save your friend from serious consequences. What right does your friend have to expect you to protect him? As a close friend, he has a definite right to expect me to testify that he was only going 50 km/hr. He has some right to expect me to testify that he was going 50. He has no right to expect me to testify that he was going 50. Copyright © 2012 by Melanie Billings-Yun.

Culture and Ethical Values Respondents who feel he has no right Copyright © 2012 by Melanie Billings-Yun. Source: Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture

Negotiating with Chinese Build trust slowly and incrementally Upheavals of past century have undermined trust-based system Focus on long-term mutual benefits and step-by-step growth Build personal connections at all levels China is a big country with overlapping authority centers Favors received must be reciprocated Respect for seniority A junior speaking out in front of a senior is considered quite rude Be precise on technical issues Chinese pay close attention to details; errors destroy trust Check for understanding and problems Great concern for face means an unwillingness to speak out Copyright © 2012 by Melanie Billings-Yun.

Negotiating with Thais Build your credibility Thais value seniority, luxury and a calm, professional demeanor Be polite in a ‘Thai’ way If Thais give you a compliment, deny it and compliment back Speak gently and try to avoid direct confrontation Prefer indirect communication style Dislike negative speech therefore difficult to get honest feedback Do not like detailed contracts; will not feel bound by them Focus on information Prefer detailed instructions to avoid later error Back up your assertions with expert opinions Build up consensus with informal informational meetings Copyright © 2012 by Melanie Billings-Yun.

Negotiating with Americans Be frank and honest They will feel betrayed or lied to if you agree only to be polite Are comfortable with open disagreement Be direct Not trained to pick up subtle signals Be open Americans like to “lay their cards on the table” But are also quite competitive Be informal and friendly, but firm Don’t be offended by detailed contracts Respect their time and space needs Get to the point quickly Don’t overwhelm their need for free time Copyright © 2012 by Melanie Billings-Yun.

Businesses and Governments Have Different Interests Profit Expansion Investment opportunities Government Providing public service Maintaining public goals Economic growth Resource maintenance Sovereignty Covering program costs Satisfying voter demands Re-election Historical reputation Copyright © 2012 by Melanie Billings-Yun.

And Differing Constituencies Business Shareholders Consumers Employees Government Voters Contributors/Supporters Local business Unions Consumer groups Environmentalists Other lobbies Other governments Media Copyright © 2012 by Melanie Billings-Yun.

Steps to Influencing Governments Identify entire influence network Build coalitions Understand the power of media Focus on your goals, not your politics Power shifts over time Build relationships with key players Approach relationships as a 2-way street But don’t confuse access with influence Or that you’re the only influencer Relationships will never win over voter opposition Put in the time in advance of needing anything Be patient! Copyright © 2012 by Melanie Billings-Yun.

Dealing with Cultural Differences Learn about the other culture A local expert will start you on the right foot. Be clear and precise in meanings Don’t assume they understand and don’t leave concerns unspoken. Problems not dealt with now will come back to bite you later. Get to know the other side carefully Is this the right fit? Best to find out if you can work together before you have committed yourself Cross-cultural negotiation shouldn’t be rushed Don’t let the other side force you into making unwise agreements or include terms that you don’t understand Copyright © 2012 by Melanie Billings-Yun.